Wednesday, December 9, 2009

Heading Towards Whitehorse and a National Pension Summit

After many pension crisis and a horrible year in the worlds stock markets the debate on pensions is reaching a critical boil. The Finance Ministers in Canada are meeting on December 17 in Whitehorse for an event called the pension summit. The summit in Whitehorse will also help all policy stakeholders in Canada to solidify their positions on pensions. 

The World Bank released a report yesterday called Pensions in Crisis
Despite the severity of the crisis, it pales in comparison to the demographic crisis which the region will face and ...
even the most severe scenario of the financial crisis pales in comparison with the effects of the demographic crisis that is looming
It went on to urge:
Countries in the region not to make any policy changes focused on addressing short-term fiscal concerns that make the long-term even worse.
Future pension system deficits can be threefold than what is currently expected, and are expected to remain at that level for more than 20 years before slightly improving. Policymakers need to use the opportunity of the current crisis to address long-term issues, which could bankrupt pension systems precisely when the numbers of people who need them are growing.”
Although the report focused on parts of Europe and Asia it is applicable here in Canada as well. The changing demographic forces are perhaps even stronger and more severe in Canada. I attempted to highlight this risk in my blog called Tales from the other side of the aging catastrophe

National Summit
Most commentators on the issue feel that now is the time to clarify the future of pensions in Canada. There are many different viewpoints and stakeholders.Here are the numbers from Statscan. Registered Pension Plans in Canada

Those currently in retirement and living on government and private sector programs have a large stake in maintaining what they have. They are represented by CARP. CARP envisions lots of pensions for everyone. They released their position in Towards a Universal Pension Plan 

Organized Labour 
Canada's labour movement has perhaps the greatest to lose as a result of any reform in this area. The unions represent mainly those employees in the public sector or at large Canadian companies. In Canada these are the only workers with gold-plated pensions. It is best summarized in a report from the CFIB called The Pension Predicament 

Independent Business 
Independent businesses are dearly affected by the pension crisis in Canada. It is here that the 11 Million Canadian without pension work. They are struggling to save for some sort of decent retirement for themselves. Theirs is  also the burden of trying to finance with tax dollars the gold-plated pensions of the pension elite. The CFIB has monitored this issue and has been a strong advocate for independent business. It is my hope that they can find a way of generating a forum for this voice to be heard. 

Pension Elites
These are Canada's public sector workers who protected by unions have gained the lions share of pensions in Canada. They pay a small contribution towards the pensions they will receive. They will retire early and be guaranteed a taxpayer funded lifetime of pension income. 
At the top of this heap are the senior mandarins of government. These are the ones who ruthlessly abuse the taxpayer for pension security. In Ontario there are over 53,000 government employees earning over $100,000 per year. This level of income guarantees them a $1 million lifetime pension.  
To see how these pension work go to the BC Pension Videos series website. These videos have provided me with lots of entertainment. The Value of your pension - Series

CD Howe 
The CD Howe Institute has been instrumental in leading a very intelligent and well balanced analysis of the pension issue in Canada. They have brought Keith Ambachtsheer the help produce a policy position currently leading the way in the pensions discussion. It is based on a Supplementary Pension (PDF) approach.

Pension Industry in Canada 
The life insurance companies and the banks in Canad provide most of the private pension coverage. It is their business and any reforms or changes to the system will put their financial position in jeopardy. They are in a delicate position and need to regain some credibility in the pension issue.  Canadians pay the highest cost in the world for the services of its banks an insurance companies. James Daw one of the foremost pension commentators in the country covers this perspective in Bankers' group wants to continue to protect you. Daw has covered the pension well. See all his articles at the Star 

Provincial Governments
At the table in the Whitehorse will be the provincial finance ministers. They have been muddling around for the past year with several expert commissions on pensions. The report from Ontario only focused on supporting the gold-plated pensions of government employees. However, the BC and Alberta commissions created the Supplementary Pension idea that is now going forward as the most popular way of reforming the Canadian pension system.
Here are the links to the Expert Commission Reports
Ontario Pension Review
Alberta and BC Getting Our Acts Together - PDF  

Canadian Media 
A very influential commentary on the pension crisis in Canada was put together by the Globe and Mail. They covered most aspects of pensions in Canada in the Retirement Lost series. I have enjoyed following the pension world through the eyes of my friend at the Pension Pulse, Leo Kolivakis.

Federal Government
To date the federal government has been quiet on the issue of pension reform. Throughout the year they have implemented a few emergency pension move but nothing major. Whitehorse will be a chance to see what is behind the curtain. The Jack Mintz Report will be released at the Finance Ministers meeting.

1 comment:

  1. Small Business owners are largely forgotten. Thats why I only focus on them. I have experience several members of my family file bankruptcy due to small business failures. I also I suffered through 2 destroyed businesses due to failure however, in my failings I have learned some of the secrets to success. (Who can say they know it all?)